Another FLSA case gets to trial based only on uncorroborated testimony

In June, we told you about Moran v. Al Basit LLC, 14-2335 (6th Cir. 2015), a new decision from the Sixth Circuit Court of Appeals demonstrating how easy it is to get to trial on a claim of unpaid overtime. Last month, in Garcia v. SAR Food of Ohio, Inc., 1:14-cv-01514 (N.D. Ohio 2015), a district court in Ohio relied on that decision to deny summary judgment to an employer that did most things right with regard to its Fair Labor Standards Act compliance.

Jose Garcia and Raymond Sutton were employed by SAR Food of Ohio, Inc. (“SAR”), which owns and operates several restaurants, in a variety of hourly positions. These positions, including cook, were not exempt from the overtime requirements of the FLSA and applicable state law. Garcia and Sutton worked varying hours based on work schedules set for them by SAR, but claim that they were frequently required to continue working beyond their scheduled shifts and that these additional hours usually amounted to several hours each week.

SAR used the work schedules to keep track of the hours employees worked. Employees were instructed to make changes to the schedules to reflect the hours that they actually worked and to initial the schedules to confirm their accuracy before payroll was processed. Other SAR employees testified that, when they made changes to their schedules to reflect their actual hours worked, they were paid appropriately. Garcia and Sutton, however, never made any changes to their schedules, but generally initialed them anyway (some schedules, they claim, were initialed by their supervisors on their behalf). As a result, they were paid for only the hours that they were scheduled to work.Paystubs issued by SAR included the statement “Any questions concerning your pay, please call . . . Sarku Japan Payroll Department.” The SAR employee handbook included a policy forbidding off-the-clock work, encouraging employees to raise any concerns about their pay with their manager or the payroll department, and prohibited retaliation against any employee who raised such a concern. Neither Garcia nor Sutton ever complained to anyone at SAR about their pay. They claimed that they never received copies of the employee handbook.

The Court broke down its analysis of Garcia and Sutton’s claims into three questions. First, was there sufficient evidence that they worked any hours that were uncompensated? Despite calling Garcia and Sutton’s evidence on this point “relatively thin,” the Court found that the Sixth Circuit’s decision in Moran required that the answer to this question be yes. Under Moran, a plaintiff’s own uncorroborated allegations of time worked off the clock is sufficient evidence to defeat summary judgment and create a genuine issue of fact that must be decided by a jury.

Second, did SAR know or should have known of the uncompensated time? An employer can avoid liability for unpaid wages if a plaintiff failed to comply with its policies and procedures regarding time reporting, but only if the employer neither knew nor should have known that the plaintiff was not being compensated for all hours worked. Because Garcia and Sutton’s supervisors knew that the restaurants were being kept open beyond their regularly scheduled hours, because the supervisors approved timesheets that Garcia and Sutton claim did not reflect actual hours worked, and because supervisors initialed at least some timesheets on behalf of Garcia and Sutton, the Court found that there was sufficient evidence to create a genuine issue of fact that must be decided by a jury.

Finally, should the supervisors’ knowledge of Garcia and Sutton’s uncompensated time be imputed to SAR so that SAR, as the employer, is liable for any violation of the FLSA? Because Garcia and Sutton claim that their supervisors prevented them from accurately reporting their hours and encouraged them to under-report their hours, the Court again found that there was sufficient evidence with regard to this third question to create a genuine issue of fact that must be decided by a jury. That Garcia and Sutton never updated their schedules to reflect actual hours worked, that they never complained about the uncompensated time, and that they never contacted the payroll department to report the behavior of their supervisors could all be considered by a jury, but could not be used to deny Garcia and Sutton the opportunity for a trial.

Even an employer that seemingly does everything right – requiring that time records be approved by employees, establishing a policy about FLSA compliance, establishing a hotline for payroll-related questions, and working to maintain FLSA compliance – can be forced to defend itself at trial against claims of unpaid overtime. This case is a reminder that it is often the actions of the front-line supervisors that are critical. Particularly given the current legal environment in which employees can get to trial based only on their uncorroborated allegations, employers should hold supervisors accountable for distributing policies to all employees and should ensure that supervisors are not allowing or encouraging any time worked to go uncompensated.

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